Moderator: Julian Conrad Juergensmeyer, Professor of Law, Georgia State University

Speakers:

– Alyssa Bradley, Barrister & Solicitor, Young Anderson, Vancouver, BC

– Raymond Young, QC , Barrister & Solicitor, Young Anderson, Vancouver, BC

Common Problems, Common

Solutions, Common Law:

Impact Fees and Special Permitting

Fee or Tax - Why does it Matter

under American Law?

1. Taxing Powers of Local Governments are limited by State Constitutional and Statutory Provisions

2. Usually means that if a Developer Funding Requirement (for, example an Impact Fee) is labeled a Tax It will be Ultra Vires

The Importance of Ultra Vires?

• A regulation is ultra vires if it varies, modifies, or

affects "the ambit of the legislative

pronouncement" in the empowering statute or

attempts to place an inconsistent interpretation or

construction on the statute

• Taxing Powers of Local government are limited

• If a required payment is a tax rather than a fee, it will

usually be invalid as ultra vires

Impact Fee: Relax It is Not a Tax

• Most state courts have recognized impact fees as permissible exercises of the police power

• The focus of controversy shifts to the standard of reasonableness which must be met since all exercises of the police power must be “reasonable”

Distinguishing Fee from Tax

– A fee is based on the need for government expenditure caused by fee payer

• Ex: Adding infrastructure for a new development

• Amount must be proportionate to that need and fees collected must be expended to benefit those who pay them

– A tax is for future, general needs

Education

Health and Social Services

Parks and Recreation

Resources and Regulation

General Government

Law, Safety, Correction

32¢

11¢4¢3¢

Example General Fund Budget - Where a

Dollar Goes

48¢

Leading Judicial Decisions

Getting the Distinction

Correct

• Requiring a payment in lieu of actual dedication was constitutional

– Dedication fees are equally legitimate when imposed pursuant to zoning ordinances that are enacted for the purpose of "'facilitat[ing] the adequate provision of transportation, water, sewerage, schools, parks and other public requirements.”

• Test used:

– (1) there must be a reasonable connection between the need for additional capital facilities and the growth resulting from new development, and (2) there must be a reasonable connectionbetween the expenditure of the fees collected and the facilities capacity provided thereby.'

Jordan v. Village of Menomonee Falls 28 Wis. 2d 608,

137 N.W. 2d 442 (1965). (appeal dismissed) 385 U.S.

4 (1966)

• Court held that the city's authority included

the power to impose imposition of a

development fee to promote the health,

safety and welfare of city residents

– the amount of the exaction or impact fee was

"within the prerogative of the City Council to

determine, and so long as it is within

reasonable limits, so that it cannot be

characterized as capricious or arbitrary, the

court will not interfere therewith."

City v. City of West Jordan, 606 P.2d 217 (Utah 1979).

(decision on rehearing) 614 P.2d 1257 (Utah 1980)

• Court held the exaction was operating as a

tax, and therefore unauthorized:

– Lack of special benefit inuring to the targets of

the fee directly for money paid was major

determinate

• SO?

– Ignored OH’s own decisions

– Goes against rough proportional share concept

– Leaves OH with bifurcated approach to impact

fees. Sometimes OK, sometimes NOT

A COURT THAT GOT IT WRONG

Drees v. Hamilton Twp. 132 Ohio St.3d 186 (2012)

Takings and Impact Fees:

Various Approaches

① Nollan/Dolan Applies to All Impact Fees

② Nexus and Rough Proportionality

③ Heightened scrutiny should apply to all

forms of development exactions

Nollan/Dolan Applies to Impact Fees Imposed

Adjudicatively but not to those Imposed

Legislatively

• Ehrlich v. City of Culver City

• Impact fees imposed by administrative agency are subject to Nollan/Dolan, but those imposed by legislation fall within police power

• Discretionary imposition provides an inherent risk of dedications unrelated to legitimate ends

• Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005)

– Test is an inquiry in the nature of a due process, not a takings, test,

and that it has no proper place in our takings jurisprudence

Nollan/Dolan Does Not Apply

• Court found it “reveals nothing

about the magnitude or character

of the burden a particular

regulation imposes upon private

property rights. Nor does it provide

any information about how any

regulatory burden is distributed

among property owners.”

The Dual Rational Nexus Test Obviates the Need to

Apply Nollan/Dolan

• The Dual Rational Nexus Test covers all the points of Nollan/Dolan – IS A STRICTER STANDARD

• Dual Rational Nexus Test

– (1) Impact fees may be no more than the government's infrastructure costs which are reasonably attributable to the new development [AKA PROPORTIONATE SHARE], and (2) The new development required to pay impact fees must benefit from the expenditure of those fees

• CAVEAT

• USSCT granted cert Oct 5, 2012

• Nolan/Dolan applies only to exactions involving:

– interest in real property

– in exchange for permit approval

– where approval is given

St. Johns River WMD v. Koontz

(77 So. 3d 1220)F

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